Is Diversified United Investment Limited’s 5.1% yield too good to miss after its report?

Diversified United Investment Limited (ASX: DUI) is one of Australia’s larger listed investment companies (LICs), with its total investments being worth around $1 billion.

Today, the company reported that revenue came in at $19.2 million, which was down by 1.7% from the prior corresponding period. Excluding special dividends, the revenue rose by 7.9% and the profit rose by 7%.

Profit after tax but before net realised and unrealised gains and losses on the investment portfolio was $15.6 million, down 4.4%.

Earnings per share (EPS) based on profit after tax was 7.5 cents. Excluding special dividends the EPS grew by 7%.

The declared interim dividend was 6.5 cents per share, compared to 6.5 cents per share in the prior corresponding period. This dividend will be fully franked and the record date will be 23 February 2018.

The net tangible asset per share (NTA) was $4.23 at 31 December 2017, this was a rise of 10.7% compared to 31 December 2016.

The company’s performance of its NTA and dividends together generated a return of 7.9% compared to the 8.4% return of the S&P/ASX 200 Accumulation Index.

At the end of the period Diversified United’s biggest five positions were Commonwealth Bank of Australia (ASX: CBA), CSL Limited (ASX: CSL), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) and Transurban Group (ASX: TCL).

Foolish takeaway

Diversified United’s yield is quite good at 5.1%, although there are LICs out there with bigger yields. I think Diversified United is one of the better LICs that focus on the large caps of Australia, I also like that a small part of its portfolio is devoted to international ETFs.

At the current price I don’t think Diversified United is a buy, but if the Aussie market suffers a fall then it could be worth a look.

Instead, I’d rather buy shares of this top income stock for quality dividends.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Transurban Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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